fresh voices from the front lines of change







(we’re liveblogging the Financial Reform hearings. Come view the live feed here)

9:20 am

Here in the Rayburn building Robert Rubin, the onetime King of American financial policy, is lecturing the Financial Commission on what he believes are the causes of the financial crisis. But that’s not why he’s here: He’s here not as a wise elder, but as one of the key people causing the problem. A little humility is called for, but that’s not what we’re getting. From his overconfident smile as he took the oath of office, to his uber-salesman demeanor, Rubin’s bearing shows that he has failed to understand that he’s not here to opine. He’s the subject of inquiry. His interlocutors should study him the way an FBI profiler studies a serial criminal: to understand his mindset so that someone like him can never cause the level of harm he has caused the nation.

Now he’s saying that he had no idea there was crazy trading going on down at those traders’ desk when he was at Citi – exactly what former Citi CEO Charles Prince told the committee a few minutes ago. “The financial system was subject to more downside risk than almost anyone had foreseen,” Rubin is now saying — except that he claimed to be one of the wise elders. Oh, and that “almost anyone” include a number of highly visible figures, people that others were somehow able to find.

He’s listing his proposed solutions – one of which should be the absence of individuals like himself in future leadership positions.

Prince’s Opening Remarks a few minutes earlier went like this:

Nobody knew. That’s why we had a AAA rating.

“I was not aware of the decisions being made on the trading desk”

“It is hard for me to fault” the high-risk decisions the traders made – which, he said, were “fully transparent” to regulators.

Interesting … he’s saying it’s a failure of risk management, too. Did they coordinate their testimony with Greenspan?

Citi not “too big to fail” or “too big to manage” – although, of course, he’s saying he failed to manage it. He’s saying size did not contribute to their losses, although he’s also saying he didn’t know what was happening at the trading desks … where enormous bets were being made that far exceeded the real assets of the company.

(the rest is here)

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